Would the Keynesian consumption function work well in a world of libertarian paternalists?
What will be an ideal response?
If consumption behavior depends mostly on current constraints and immediate consequences, then current consumption is driven by current income, as the Keynesian consumption function says. Libertarian paternalism seeks to tighten the constraints. More effective inducements to save might lower the marginal propensity to consume, but it will be as true as ever that changes in current consumption will be driven principally by changes in current income.
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The Federal Open Market Committee
A) meets weekly to set Fed policy. B) has 7 voting members. C) always includes the president of the Federal Reserve Bank of New York as a member. D) does not include any members of the Board of Governors.
Which of the following statements would be true of an economy that can be characterized as being to the left of the IS curve?
A) There is an excess demand for commodities at the existing interest rate. B) There will be a tendency for the level of output to decrease. C) There is an excess supply of commodities at the existing interest rate. D) There will be a tendency for interest rates to fall.
Assume that seigniorage and the government's primary deficit are both zero
If the real interest rate is less than the growth rate of real GDP, fiscal policy ________, and if the real interest rate is greater than the growth rate of real GDP, fiscal policy ________. A) is sustainable; may be sustainable B) is unsustainable; is sustainable C) is sustainable; is unsustainable D) is unsustainable; may be sustainable
Monopolistic competition and perfect competition are similar in that each market structure is characterized by
A) advertising. B) production at minimum average cost in the long run. C) a horizontal demand curve. D) the absence of long-run economic profits.